Chevron presses on while Romanian shale gas future remains uncertain

Romanian flag painted on a wooden pawn
Source: DollarPhotoClub

US energy giant Chevron has obtained permission to start exploratory drilling in Urdes, a village in the eastern district of Vaslui, Romania. This is Chevron’s fifth shale deposit site in Romania.

In October 2013 the American company announced that it would suspend drilling at Silistea, Pungesti village also located in Vaslui county. The decision came after anti-fracking protests staged in North-East Romania. At the time, the company released a statement which said that “Chevron can confirm that it has suspended activities in the mentioned location. Our priority is to conduct activities in a safe and environmentally responsible manner consistent with the permits under which we operate,” the company release reads.

Earlier this month, however, Chevron decided to resume drilling in Silistea, starting with collecting soil samples to be analysed in laboratories.

Early April saw renewed anti-fracking protests in Romania’s capital Bucharest as well as at the Pungesti-Silistea Chevron site. Chanting slogans like: “Water, air and nature, not fracking, not cyanide,” or “Romania is our country, Chevron will never poison it”, the protesters demanded hydraulic fracturing in unconventional gas exploration to be banned by law.

Several European countries, including France and Bulgaria, have issued memoranda totally banning fracking in shale gas exploration.

Romania is potentially interested in exploring its shale gas deposits in order to end its energy dependence on Russia. Romanian-Russian relations have been tense for some time now over clashing interests in Moldova. Romania would like to see Moldova develop closer ties with Europe and the European Union, which they hope would create a favourable environment for possible Moldova-Romania integration. Russia on the other hand views Moldova as a potential sphere of its influence. Given this tense environment it is not ideal that Romania depends on Russia for 98% of their energy needs.

Having said that, shale gas exploration is not the only route Romania can take towards energy independence. Romania has a vested interest in the development of the Nabucco pipeline transporting wet gas from Azerbaijan to Romania and other countries in the region. However, on July 28th the Shahdeniz Consortium members involved in the production of gas in Azerbaijan preferred TAP (the Trans-Adriatic Pipeline) over the Nabucco West project. TAP will carry gas to Italy through Greece and Albania, bypassing Romania and the others.

In the light of these events, shale gas might still be Romania’s best bet. According to the estimates of the US Energy Information Administration, Romanian shale gas reserves equal 49.5 trillion cf. This is not a lot compared to Poland’s estimated 148 trillion cf, but still a prize worth fighting for. Yet the road to shale gas in Romania has so far been paved with setbacks.

In 2010 Romania signed an agreement with Chevron on shale gas exploration in an area of 2 million hectares. This caused wide-spread protests which led to the government issuing a ban on hydraulic fracturing. With a change of government the ban was waived in March 2013. Following that, in July the government announced plans to attract 10 billion euros in investment and create 50,000 new jobs. Since the government lifted the ban on shale gas, Chevron announced its first drilling plans in November 2013. With this announcement public protests resumed.

Chevron’s current activities in Romania haven’t moved beyond drilling exploratory wells. The jury is still out on Romanian shale. Yet with public protests, no clear tax incentives for investors, and a government infamous for its corruption, Romania might find it difficult to attract major energy players. If Poland’s example has taught us anything, it is that it takes much more than empty statements to make the business of shale gas work.

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